Activity breeds activity and activity breeds success. As a real estate investor you have to be ACTIVE, you must be taking action, you must be aggressively chasing after deals, chasing after financing, shaking hands and meeting people. If you find yourself casually looking around on the internet and driving around once in a while looking for deals you should rethink your strategy. One way to keep yourself active and motivated is through simple goal setting. Set specific, actionable and measurable goals. Have a weekly goal set for how many phone calls you are going to make (to agents, lenders, property owners, etc) how many properties you are going to look at, and how many offers you are going to make. Set these goals and hold yourself accountable. I’m not going to set your goals for you, but my recommendation is to make at least 20 calls, look at five properties and make one offer each week.

Posted by Carter Brown

A couple of days ago the National Association of Realtors released some statistics that showed February existing homes sales showed and unexpected increase. A few days later, a key government report released some statistics showing that February new homes sales fell to a 13 year low. So, the question is, what does all this mean? I personally don’t think these reports by themselves mean much at all. As I mentioned in a previous post, one month’s data doesn’t tell us much. We need to be looking for trends or consistent movement in one direction of the other. The trend line recently has been down and now everyone is looking for the bottom and more importantly when things start ticking back up.

Having said all of that, there are always opportunities to find good deals and make money in real estate. It is good to be informed and to stay on-top of what is happening in the real estate market, but don’t get too caught up on if it is a good time or bad time to be buying.

Get out and look for deals and make it happen regardless of what you are reading in the news media.

Posted by Carter Brown

Interesting and surprising numbers were released by the National Association of Realtors. Sales of existing homes posted an unexpected increase in February when a decline was anticipated. Does this mean the housing market has hit a bottom and things are on the rise? It is hard to say. I think it is an indication that sellers are finally realizing that for them to sell their homes they need to reduce their prices, and this is great news for investors. As prices come down, sales activity will pick up and that is probably what is happening.

In general, we don’t want to put too much stock into one month’s numbers. Numbers are almost always more meaningful when there are trends present. Anything can happen in a snapshot of time. What would indicate the market is turning is 3-4 months or so of sustained growth in different areas such as total sales numbers, price increases, etc.

I’ve included a portion of the AP story below.

WASHINGTON (AP) — After falling for six straight months, sales of existing homes posted an unexpected increase in February which may have reflected more aggressive price cutting by sellers in some parts of the country, a real estate trade group reported.

The National Association of Realtors said that sales of existing homes rose by 2.9 percent in February to a seasonally adjusted annual rate of 5.03 million units. It was the biggest increase in a year and caught economists by surprise. They had been expecting a small decline.

The trade group reported that the median existing sales price in February fell to $195,900. That was the largest year-over-year drop on records that go back to 1999.

Lawrence Yun, chief economist for the Realtors, said that prices in some formerly hot markets in California and Florida were seeing significant price declines now as sellers try to attract buyers.

Analysts cautioned against reading too much into the one-month rise in sales. Many economists are predicting that the steep slump in housing will not bottom-out until later this year after prices fall further and allow huge levels of unsold inventories to be reduced.

“We’re not expecting a notable gain in existing-home sales until the second half of this year, but the (February) improvement is nother sign that the market is stabilizing,” Yun said.

By region of the country, sales surged by 11.3 percent in the Northeast and were up 2.5 percent in the Midwest and 2.1 percent in the South. The only region of the country to see a decline in the sales was the West, where they dropped by 1.1 percent.

Posted by Carter Brown

When making offers on real estate put some things into your offer that you can use as negotiating tools. These are extra items that you really don’t care about actually getting in the deal. These items can include asking the seller to pay for closing costs, a home warranty, personal items (furniture, appliances, bear skin carpet, etc.), assistance with financing, etc. When it comes time to counter-offer you can concede and give in on these “extra� items instead of increasing your offer. You will be perceived as a willing negotiator willing to give in and concede and will not be seen as a hard nose buyer digging in your heels not willing to budge on your terms. As you take these things out of your offer the seller will feel compelled to give in and negotiate in good faith as well.

Posted by Carter Brown

Report: Panic Overstates Commercial Real Estate Risk

Staff Report from National Real Estate Investor

Mar 19, 2008 2:53 PM

A newly released report by CBRE Torto Wheaton Research states that future commercial mortgage defaults and losses could be overestimated threefold. The culprit? Not surprisingly, overreactions in the credit markets are to blame, according to the report.

“While prices have been slow to change in the commercial real estate equity market, the commercial real estate debt markets have been driven by increasing spreads, and decreased availability of mortgage capital,� states the report. In recent weeks, prices of the CMBX — a set of derivatives that provide insurance against default — and prices in the commercial mortgage-backed securities (CMBS) market are “out of line with what any likely future income stream of the underlying mortgages would suggest.�

Despite an expected incremental rise in vacancies across all major property types over the next few years, vacancies are still expected to remain lower than 2002/2003 peak levels, and the 2008/2009 period is projected to see rents to continue moving upward into positive territory.

Against a backdrop of strong fundamentals, the analysis reveals that the 10-year loss rate for the entire CMBS conduit market is just 2.53%. Worse case scenario — under pressure of a major financial stress — the highest 10-year loss rate still only comes in at 8.5%. That is not to say that all vintages of CMBS were created equally — 2006 and 2007 vintages are projected to see loss rates twice as high of those found in the 2002 and 2003 vintages, as well as later issues.

Currently, according to the report, CMBS and CMBX markets have priced in losses tied to doomsday estimates, more in line with 1992, at which point commercial banks lost 160 basis points.

One of the big differentiators between today’s ailing economy and that of 1992, is that there is currently an equilibrium with supply and demand in commercial real estate, which should weather the storm even as the economy is running out of steam.

And, one of the biggest feared financial stressors — the collapse of a major investment bank — might still not bump the economy too far off its tracks. As all eyes are trained on the JP Morgan buyout of Bear Stearns, which includes some $16 billion in CMBS, that is not likely to be the event that finally sets the price of CMBS. Dumping the bonds onto the market would likely make little sense given the Fed’s pledge to take in hand $30 billion of the ailing investment bank’s most illiquid assets, including both residential and mortgage-backed securities.

WSJ Changes Its Tune

David Bodamer March 11th, 2008

The Wall Street Journal had reported of late of the problems facing commercial real estate looking largely at the CMBX index, which has signaled huge defaults coming. Goldman Sachs also put a report out predicting just under $200 billion in defaults. Yesterday, though, the paper reversed course a bit, reporting that the downturn won’t be as bad for commercial real estate.

One thing interesting about the article is that the WSJ used Reis Inc.’s data, which shows that retail development in the recent cycle did not reach the same peaks it did in the 1980s. That contradicts the line the WSJ put out in this story, when it quoted data from Property Portfolio Research, which does say that retail development in the most recent cycle did hit a new peak. So which of these views is correct?

On the bright side, however, the commercial-property downturn isn’t expected to be nearly as steep as the current slump in the housing market, where recent data showed foreclosures rising to the highest level on record in the fourth quarter of 2007.

Losses by commercial-building owners, lenders and investors are likely to be tempered by the lack of overbuilding in recent years and the ability of most office buildings and other commercial ventures to keep current on their mortgages.

That’s partly because commercial properties typically produce income. While millions of American homes are under water because their value has fallen below the amount owed on them, most commercial buildings are generating enough cash to pay off their loans.

“Fundamentally the markets are in pretty good shape,� says James Duca, managing director of Moody’s Investors Service.

Can you invest in real estate with no money? The answer is No. Contrary to what you may have heard, when investing in real estate you have to have money or at least access to money. There is no such thing as buying real estate with no money. The good news is it doesn’t have to be your own money and this is why real estate is such an attractive business and investment. So as an investor, you need to make sure you have access to good sources of capital regardless if you are a new investor or a seasoned investor. Having sources of money will also make working with real estate agents much easier and will give them more incentive and motivation to help you find deals.

Start with a mortgage broker, as opposed to your local bank. A mortgage broker is going to be more for investor-friendly and will have access to a much broader range of investment loan products. Don’t stop there. You also want to have relationships with hard-money lenders. These lenders provide short-term financing primarily for rehab projects. They work significantly different than traditional lenders in terms of how they value projects and how they determine lending limits. You will find them much more flexible than traditional lenders. Lastly, you should always be forging relationships with other investors and other private parties that may be interested in investing in your projects or partnering with you on your deals. Real estate investment clubs are a great place to meet these people.

The last thing you want to have happen is to spend value time and energy looking for deals and then have the deals fall apart because of lack capital and funding.

Posted by Carter Brown